Yemen central bank FX reserves hit 6-month low

DUBAI, April 14, (RTRS): The foreign reserves of Yemen’s central bank shrank by $457 million in February to their lowest level since last August as oil exports from the impoverished Arab country plunged by a third, data showed on Sunday.

The Arabian peninsula state, which relies on crude exports to replenish its reserves and finance up to 70 percent of budget spending, has suffered from frequent bombings of its main oil pipeline since political turmoil started in 2011.

Gross foreign assets held by the cen- tral bank fell to $5.8 billion in February, covering 5.9 months of imports, from $6.2 billion or 6.4 months of imports in January, central bank data showed. Net reserves, which factor in the central bank’s foreign obligations, stood at $4.5 billion in February.

The central bank, which received a $1 billion loan from Saudi Arabia last year to support its reserves, did not explain the decrease in its monthly bulletin.

In March, its vice governor told Reuters that reserves of $6.2 billion were appropriate, but that the level would depend on whether Yemen continued to suffer pipeline bombings by Islamist militants and disgruntled tribesmen. Attackers blew up parts of Yemen’s main 110,000 barrel per day oil export pipeline in February and March, halting the flow of crude. Another explosion occurred earlier this month, only two weeks after the pipeline was repaired.

A long closure of the line last year forced Yemen’s largest refinery at Aden to shut, leaving the country dependent on fuel donations from Saudi Arabia and imports.

Yemen exported $210 million worth of crude oil in February, a drop of more than 30 percent from January, the data also showed. The government’s share of those exports was 1.8 million barrels in February, the lowest level since May 2012.

In January, the International Monetary Fund warned that the political transition following the overthrow of President Ali Abdullah Saleh in February 2012, and security concerns — particularly attacks on key oil and electricity facilities — threatened the economic outlook.